The long-promised single-digit interest rate is now seeming more and more likely as the banks yesterday agreed to provide not more than 6 percent for savings from February 1 as part of their preparation to usher in 9 percent lending rate from April.

The decision was taken at a meeting of the Association of Bankers, Bangladesh (ABB), a forum of managing directors of banks. ABB Chairman Ali Reza Iftekhar presided over the meeting, where MDs of almost all banks were present.

“The ABB requested all banks to implement the 6 percent interest rate on deposits from the beginning of February so that the single-digit lending rate can be made effective on time,” said Mashrur Arefin, the managing director of City Bank.

At a meeting on December 30 last year with Finance Minister AHM Mustafa Kamal, private banks’ sponsors and managing directors agreed to deploy single-digit interest rates from April 1.

Three other MDs on condition of anonymity told The Daily Star that all banks would implement the interest rate for deposits collectively with a view to tackling the ill competition among banks to poach deposits by offering higher rates.

Some 20 banks have already lowered their interest rate for deposits to 6 percent this month from the previous 8-9 percent, a move that has prompted a flurry of savers to withdraw their funds. The savers are looking to park the funds with banks that are yet to bring down their interest rate.   

As per the ABB decision, banks will not follow the six percent interest rate for deposit pension schemes (DPS), where savers park a specific amount of money every month and get a lump sum after a certain period.

To facilitate banks to charge 9 percent for loans from April, the finance ministry on January 20 instructed the autonomous, semi-autonomous and government companies to keep 50 percent of their surplus funds at 6 percent interest rate with private lenders.

The remaining half of their deposits will go to state banks, which can offer no more than 6 percent interest.

The private banks would get government funds in line with their paid-up capital.